{"id":21035,"date":"2022-11-09T13:57:38","date_gmt":"2022-11-09T13:57:38","guid":{"rendered":"http:\/\/healthmedicinet.com\/business\/the-triple-bottom-line-framework\/"},"modified":"2022-11-09T13:57:38","modified_gmt":"2022-11-09T13:57:38","slug":"the-triple-bottom-line-framework","status":"publish","type":"post","link":"https:\/\/healthmedicinet.com\/business\/the-triple-bottom-line-framework\/","title":{"rendered":"The Triple Bottom Line Framework"},"content":{"rendered":"

\"The<\/p>\n

GUEST POST from Dainora Jocuite<\/strong><\/p>\n

Money, money, money. It wasn\u2019t so long ago that it was always sunny in the rich man\u2019s world. <\/em>But today, things just aren\u2019t that easy, and talking about money isn\u2019t enough.<\/p>\n

Businesses cannot thrive and survive in a competitive environment with only one bottom line \u2013 profit.<\/p>\n

United Nations Global Compact report<\/a> points out that such issues as poverty, an uneducated workforce, and resource scarcity will, and already is, causing issues for business growth. In addition, both investors and potential talents are looking deeper than just the company\u2019s financial success before they commit. So, next to Profit, business\u2019s effect on People and the Planet are just as crucial measurement indicators.<\/p>\n

\n

\u201cPoverty, conflict, an uneducated workforce, and resource scarcity for example, are also strategic issues for business success and viability.\u201d
\n\u2013 UN Global Compact<\/span><\/p>\n<\/blockquote>\n

And what do you get once you combine all three? Planet, People, and Profit are often referred to as the three pillars of sustainability. However, for a business to define sustainability, to have clear and reachable goals, and in return to have a fitting strategy to reach those goals can be challenging.<\/p>\n

This is where the need and benefits of the triple bottom line framework become most evident.<\/p>\n

What is the Triple Bottom Line Framework?<\/h2>\n

The term triple bottom line <\/em>(TBL) was coined So, what exactly is TBL?<\/p>\n

Many like to argue that it is just another accounting tool. Yet in Elkington\u2019s own words, it is a sustainability framework that examines an organization\u2019s social, environmental, and economic impact<\/strong>. It measures a business\u2019s environmental efforts (\u201cplanet account\u201d), social well-being (\u201cpeople account\u201d), and a fair economy. It can be implemented Decades before the triple bottom line, the dominant belief was that the only responsibility a business has is to generate profit. It was set in place In addition to helping with planning sustainable growth, the triple bottom line can act as a reporting tool, thus, it focuses on long-term results and not just one-off campaigns to gain some publicity \u2013 can an organization sustain a just economy, environmental resources, and human capital?<\/p>\n

Once we shift our attention from quarterly reports to a span of multiple years,<\/p>\n

\n

sustainability is no longer just a \u201cto-do\u201d list, but an opportunity that will rejuvenate business in an economy that does not exploit natural resources and social systems.<\/span><\/p>\n<\/blockquote>\n

\"Triple<\/p>\n

The Three Pillars of Sustainability<\/h2>\n

The triple bottom line goes hand in hand with the 1987\u2019s Brundtland Report<\/a> and the three key areas of development established Yet the definition of sustainability is a little bit more complex than that.<\/p>\n

It is natural, that once you think of sustainability, your mind might wander to emissions, deforestation, climate change, and other related issues. For the longest, environmental changes have been the most reported and the most talked about topic. And for a good reason. The environmental pillar or Planet is considered to be the most important component of sustainability as it contains the social and economic systems within it.<\/p>\n

But just like there wouldn\u2019t be people without a planet, there wouldn\u2019t be a business without people, and there wouldn\u2019t be prosperity without business. All three areas are tightly interconnected and initiatives to address one often overlap with the other area, and naturally, when everything is so tightly knit, trade-offs are inevitable.<\/p>\n

Sometimes decisions must be made to accommodate people at the cost of the environment OR decisions must be made to solve one environmental issue at the cost of another. A good example here would be an effort to reduce the consumption of single-use plastic bags Trade-offs make it impossible to talk about sustainability without considering all the pillars equally. Implementing the triple bottom line helps a business to form a holistic view of it.<\/p>\n

Sustainability strives for:<\/p>\n

    \n
  • Viable<\/strong> environmental-economic impact: business is executed with the environment and resources in mind, when possible, looking for green solutions or giving back, i.e., reforestation work.
    \nTrade-off<\/strong>: green business solutions can be intrusive and negatively affect private property (i.e., wind turbines in neighboring lands).<\/li>\n
  • Bearable<\/strong> socio-environmental impact: education and awareness allow people to make environmentally conscious decisions, curb consumption and develop healthy habits that directly impact the environment.
    \nTrade-off<\/strong>: minimal consumption and complete protection of the land stalls economic growth.<\/li>\n
  • Equitable<\/strong> socio-economic impact: people have an opportunity to work and earn a fair wage, and business strives to increase the general welfare of the people and increase the standard of living. This generates economic opportunity for both businesses and individuals. Corporate taxes also play a crucial role here \u2013 it is thanks to taxes that an organization contributes to supporting various societal programs.
    \nTrade-off<\/strong>: new business ventures can create more jobs but increase consumption of nonrenewable materials.<\/li>\n<\/ul>\n

    Planet<\/h3>\n

    Planet<\/strong> bottom line focuses on an organization\u2019s environmental impact, both positive and negative. Sustainable innovation (or on the environmental scale \u2013 eco-innovation<\/a>), helps an organization to place its focus on the environment, Impact on the planet can be created Positive environmental impact can seem grandiose and nearly impossible to achieve. Not every organization is equally equipped to take drastic measures and pursue such efforts as reforestation, ocean clean-up, or full refurbishment of manufacturing facilities. Thus, while many regulations and recommendations exist, there is no one-size-fits-all approach to sustainability. Reporting and measurement really depend on such variables as the organization\u2019s industry, location, size, and financial capabilities.<\/p>\n

    In addition, pursuing this bottom line can put the business in limbo, forcing it to decide between faster or<\/em> more sustainable goods delivery; lower-costing or<\/em> ethically sourced materials, and so on. These and similar initiatives can seem costly and counterproductive to what a business should <\/em>be doing \u2013 generating profit. Yet like with most things in life, sustainability is not just black or white and it would not be a prevailing topic if there wasn\u2019t true profit to be gained.<\/p>\n

    Benefits of The Planet Bottom Line<\/h3>\n

    Besides the obvious emotional benefits of saving the earth<\/em>, just feeling good while doing good, <\/em>and complying with regulations there are practical reasons why you should pursue Planet bottom line:<\/p>\n

      \n
    1. Satisfying consumer demand:<\/strong> GreenPrint\u2019s 2022 Business of Sustainability Index<\/a> indicates that demand for sustainable services and products is growing with 69% of respondents saying that \u201ca product\u2019s environmental friendliness is important to their purchasing decision\u201d and 78% agreeing that they are interested in buying from environmentally friendly businesses.<\/li>\n
    2. New business opportunities<\/strong>: a shift towards net zero is creating demand for new green solutions. A recent report<\/a> As mentioned earlier, pursuing The Planet bottom line does not necessarily mean making big and drastic changes. Environmentally positive impact-creating initiatives that you can consider are:<\/p>\n
        \n
      • Recycling opportunity in-house and limited use of materials (i.e., unnecessary printing).<\/li>\n
      • Reducing travel, remote work opportunities, and\/or public transportation benefits.<\/li>\n
      • Partnerships with green businesses and buying locally manufactured goods.<\/li>\n
      • Optimizing and reducing energy consumption.<\/li>\n
      • Seasonal company-wide green initiatives (i.e., day to collect trash or volunteer).<\/li>\n
      • Becoming an ambassador of an environmental cause and advocating for it.<\/li>\n
      • Creating an option for customers and employees to donate instead of receiving material gifts.<\/li>\n
      • Workshops and training to educate and bring awareness on environmental issues and how the organization can positively impact it.<\/li>\n
      • Find innovative ways to be more effective or efficient in your operations The bigger picture will always be comprised of smaller bits and pieces and while the above-mentioned initiatives might seem small, put together they can make an impact. That\u2019s why giving your employees a voice and engaging the whole organization is so important. While it might sound like a big and complex feat, right tools, such as Viima<\/a> can simplify the process allowing you to run idea challenges<\/a> on sustainable innovation and development topics.<\/p>\n

        Reporting<\/h3>\n

        Now, while environmental initiatives are important on many different levels, from a business point of view, they should contribute to profit generation. Thus, once your Planet bottom line initiatives are in place and running, it is crucial to report on them either on your website, or in your annual business or sustainability report.<\/p>\n

        The Non-Financial Reporting Directive<\/a> (NFRD) came into effect back in 2018 requiring public interest companies with more than 500 employees to report on how they are dealing with sustainability matters. In 2024 we will see an additional directive<\/a> on Corporate Sustainability Reporting which will apply to large companies that meet 2 of the following 3 criteria: more than 250 employees; more than \u20ac40 million net turnover; more than \u20ac20 million on the statement of financial position.<\/p>\n

        But reporting should be considered Reporting and measurement of positive impact can be quite difficult, especially if it is a voluntary initiative and is not based on any regulation-implied requirements. Below is a list of KPIs to consider:<\/p>\n

          \n
        • Information on electricity consumption.<\/li>\n
        • Information on fossil fuel consumption.<\/li>\n
        • Information on waste management.<\/li>\n
        • Change in land use\/land cover.<\/li>\n
        • Reduction in greenhouse gas emission.<\/li>\n
        • Amount of waste generated and, when relevant \u2013 amount recycled.<\/li>\n
        • Amount of ethically sourced materials.<\/li>\n
        • Information on volunteering or charitable work done.<\/li>\n
        • Information on new local, sustainable partnerships.<\/li>\n<\/ul>\n

          \"People<\/p>\n

          People<\/h3>\n

          People<\/strong> of the triple bottom line encompasses all <\/em>the people included in or affected It goes far beyond just the small circle of shareholders. This category includes (but is not limited to) employees, suppliers, wholesalers, customers, local or global communities within which the business operates, and future generations. Some people like to emphasize the future generations There are certain aspects of this bottom line that might be regulated The People aspect is an organization\u2019s social impact or social responsibility. And as earlier cited UN Global Compact states, \u201csocial responsibility should be a critical<\/strong> part of any business because it affects the quality of a business relationship with stakeholders\u201d.<\/p>\n

          Benefits of The People Bottom Line<\/h3>\n

          Social initiatives might not be seen as profitable in the short run, but on a bigger scale, doing what is right <\/em>and doing good<\/em> positively affects the company\u2019s standing amongst its competitors. For example, such initiatives can positively affect the following:<\/p>\n

            \n
          1. Employee retention: <\/strong>Companies that invest in their employees\u2019 satisfaction end up saving resources in the longer run. Time and money spent searching, hiring, and training employees can be invested in different opportunities. In addition, people that want to stick around in a company indicate good organizational health and improve brand image.<\/li>\n
          2. Attraction of top talents: <\/strong>More and more routine work is being automated, and value is starting to be increasingly created There are a lot of organizations that go far beyond the basic<\/em> in-house social needs and are willing (and are financially capable) to give back to communities with charity work, donations, education grants, and various volunteering and community engagement initiatives.<\/p>\n

            However, not every company is capable of running such initiatives. Smaller-scale improvements like supporting your employees in setting up home offices with recycled or new equipment can be a great morale boost. In return, it creates comfort for people to work from home, reducing time spent commuting and\/or using cars, leaning toward the Planet bottom line. With sustainability, every small effort counts.<\/p>\n

              \n
            • Paid internships for students.<\/li>\n
            • Organizing educational projects for externals (i.e., coding academy for students, job searching training).<\/li>\n
            • Skill training and learning opportunities for employees.<\/li>\n
            • Internal anti-racist training.<\/li>\n
            • Employee surveys or feedback to keep everyone in the loop.<\/li>\n
            • Salary transparency.<\/li>\n
            • Employee stock plan.<\/li>\n
            • Volunteering work within the nearest communities.<\/li>\n<\/ul>\n

              Reporting<\/h3>\n

              Topics to report on and how your organization\u2019s initiatives affected them can be:<\/p>\n

                \n
              • Demographics of your employees and partners (i.e., working with small or minority-owned businesses).<\/li>\n
              • Vacation days collected and used to see whether employees are rested and not overworked.<\/li>\n
              • The average difference between wages and finances needed for minimum living standards in the area.<\/li>\n
              • Average commuting time.<\/li>\n
              • Average employee benefits.<\/li>\n
              • Information on diversity of employees.<\/li>\n
              • Job safety KPIs (i.e., reported incidents, corrective actions taken).<\/li>\n
              • The number of new jobs created.<\/li>\n
              • Hours spent on employee or external communities\u2019 training.<\/li>\n
              • Information on second-tier suppliers (i.e., where and how your first-tier suppliers are sourcing materials).<\/li>\n<\/ul>\n

                \"Dubai<\/p>\n

                Profit<\/h3>\n

                Profit <\/strong>TBL is not meant to discount profit in any way \u2013 rather incorporate it into the other two legs of sustainability: investment in social initiatives or environmental projects relies directly on profit and a company that does not do well financially cannot contribute to the other areas \u2013 social and environmental impact.<\/p>\n

                Profit refers to the influence that the organization is creating on the whole environment<\/strong> within which it operates: ethical means to earn a profit; cooperating with and supporting ethical partners; fair wages and full taxes paid.<\/p>\n

                Profit as a component of TBL is pretty straightforward, yet there are certain aspects that might be confusing. And it seems to arise from a two-sided view of Profit: the philanthropic take with emphasis to give back to society as a charity<\/strong>, and pure profit to satisfy shareholders<\/strong>.<\/p>\n

                However, when talking about sustainability and the triple bottom line, these two sides are inseparable. The company can stay in business and<\/em> drive value for the People and the Planet only if it makes a profit<\/strong>.<\/p>\n

                The triple bottom line\u2019s Profit is a cycle<\/span>: a business that makes a profit can then invest in innovation, creating a positive impact on the Planet and the People; can then pay taxes that in return will be used for social good; can then grow to create jobs for People and so on.<\/p>\n

                \"Key<\/p>\n

                Conclusion<\/h3>\n

                The triple bottom line like other sustainability-oriented initiatives can seem quite idealistic in a world still strongly focused on profit.<\/p>\n

                But as McKinsey report<\/a> over the past 5 years, investment into sustainable funds has been on a rise and even if current environmental, social, and governance (ESG) frameworks are far from perfect, ESG considerations are becoming more important in companies decision making. In addition, investing in sustainable innovation does result in stronger economies, higher living standards, and more opportunities<\/a> for individuals.<\/p>\n

                There are no better words, to sum up this article than John Elkington\u2019s words<\/a>:<\/p>\n

                \n

                \u201cTo truly shift the needle, however, we need a new wave of TBL innovation and deployment. None of these sustainability frameworks will be enough, as long as they lack the suitable pace and scale \u2014 the necessary radical intent \u2014 needed to stop us all overshooting our planetary boundaries.\u201d<\/strong><\/p>\n<\/blockquote>\n

                The challenge here is that businesses still must satisfy shareholders and to deliver the value they have to make tradeoffs. There\u2019s no one golden rule on how to satisfy all three areas of TBL equally, it is a continuous, balancing act, and decision-making should be based on long-term goals. But the fact is, that decisions must <\/strong>be made, and it is the best time to go beyond planning and start implementing.<\/p>\n

                This article was previously published in Viima\u2019s blog<\/a>.<\/em><\/p>\n

                Image Credits: Unsplash, Viima, Pexels<\/p>\n

                \"Subscribe<\/a>Sign up here<\/a> to get Human-Centered Change Innovation Weekly delivered to your inbox every week.<\/strong><\/p>\n

                <\/p>\n","protected":false},"excerpt":{"rendered":"

                GUEST POST from Dainora Jocuite Money, money, money. It wasn\u2019t so long ago that it was always sunny in the rich man\u2019s world. But today, things just aren\u2019t that easy, and talking about money isn\u2019t enough. Businesses cannot thrive and survive in a competitive environment with only one bottom line \u2013 profit. United Nations Global […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-21035","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/posts\/21035","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/comments?post=21035"}],"version-history":[{"count":0,"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/posts\/21035\/revisions"}],"wp:attachment":[{"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/media?parent=21035"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/categories?post=21035"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/healthmedicinet.com\/business\/wp-json\/wp\/v2\/tags?post=21035"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}